$TSLA bulls drive away with fast gains

Shares of Tesla (TSLA) have been rocketing higher, delivering significant gains to upside option positions opened less than a week ago.

On Jan. 3, Market Rebellion’s Unusual Activity scanners showed that 3,200 Weekly $450 calls expiring this Friday, Jan. 10, were purchased for $8.00 to $15.10 with shares at $440.38. This was clearly a new position, as open interest in that strike was just 2,018 contracts before the trade occurred.

Those calls have thus far traded for as much as $48.52 today, at least 3 times their average purchase prices. The stock surged 13.14% in the same time period, a huge move but still nowhere near that of its options on a relative basis.

Long calls lock in the price where investors can buy a stock, letting them position for a rally at limited cost with the potential for significant leverage. They carry less risk than owning shares because the most that can be lost is the price of the options no matter how far the stock might fall.

TSLA is up 5.04% last at $192.70. The electric car maker announced yesterday that production of its Model Y SUV has begun at its Shanghai factory.